Safaricom’s net profit for the full year that ended in March jumped 19.54 percent to Sh74.7 billion on strong M-Pesa and mobile data revenue growth, but the telco also lost Sh1.9 billion in revenues after the government banned sports betting last year.
The stringent rules imposed last year on betting activities hurt Safaricom’s revenue with the loss of betting, which represented a negative 32.8 percent change when compared to the previous year.
The company’s earnings growth was driven by higher sales, reduced costs and one-off gains from the acquisition of M-Pesa, its mobile money service brand, which is also its second-largest revenue stream.
Apart from losing to the betting revenue, the company will also see the lose more money foregoing about Sh5.5 billion in revenue from M-Pesa after it removed charges on small transfers, to facilitate cashless transactions and help slow the spread of the coronavirus.
Waiver of sending charges
The company made Sh84 billion from M-Pesa in the 2019/20 financial year. This is against another Sh600 million revenue loss due to waiver of sending charges on transaction amounts of less than Sh1,000.
In 2019, after six months of push-and-pull between the Kenyan government and betting firms, the State struck at the heart of the firms’ operations, ordering telcos to shut down their pay bill numbers and shortcodes of 27 companies, some whose licences are yet to be renewed.
Some of the big names in sports betting in Kenya include SportPesa, Betin and Betway. Others are Betpawa, Premierbet, Lucky 2 U, 1XBet, Mozzartbet, Dafabet, World Sport Bet, Atari Gaming, Palmsbet and Bet Boss. Others are Betyetu, Elitebet, Bungabet, Cysabet, Nestbet, Easybet, Kick Off, Millionaire Sports Bet, Kenya Sports Bet and Eastleighbet.
The betting industry in Kenya depends almost entirely on mobile money transactions by gamblers.
To place bets, gamblers load money into virtual wallets run by mobile companies. Those who win also collect their winnings through the same wallets, unless the amount won is so big that the payment has to be made in a cheque.